Final Report | Review of John Schnatter Statements and Media Response
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Final Report | Review of John Schnatter Statements and Media Response For Release: December 7, 2020 Freeh Group International Solutions, LLC Attorney Client Privilege Attorney Work Product Privileged and Confidential Table of Contents Introduction ............................................................................................................................................... 2 Executive Summary .................................................................................................................................. 2 Comments on the NFL .............................................................................................................................. 3 Comments on the Diversity Training Call ................................................................................................ 6 FGIS Interview Findings ........................................................................................................................... 9 Conclusion .............................................................................................................................................. 12 P a g e | 1 Attorney Client Privilege Attorney Work Product Privileged and Confidential Introduction Freeh Group International Solutions, LLC (“FGIS”) at the direction of the law firm Hughes Hubbard & Reed LLP was engaged to: (1) conduct an assessment of public statements by Mr. John Schnatter relating to race in order to assess the disparity between his statements and press reports concerning such statements; (2) interview Mr. Schnatter’s co-workers, friends, and prominent African Americans in order to determine any racial bias or prejudicial statements or conduct in Mr. Schnatter’s professional and personal life; and (3) interview Mr. Schnatter to gain an understanding of his personal background, specifically the social environment in which he was raised.1 The individuals interviewed were also asked to provide their perceptions and assessment of the actual comments at issue which were made by Mr. Schnatter and outlined below. The comments examined here are evaluated in the context of their expression, and can be fairly and reasonably interpreted without any special expertise. As to examining Mr. Schnatter’s past personal and professional history regarding racial attitude and any bias, FGIS conducted the equivalent of the type of “background” investigations which are routinely done for governmental appointees, and with which FGIS is particularly experienced. Executive Summary By way of conclusion and as set forth in detail below, a thorough examination by FGIS found that the public comments by Mr. Schnatter were neither intended nor can reasonably be interpreted to reflect any racial bias, prejudice, or disrespect for African Americans or people of color. Moreover, the FGIS background investigation of Mr. Schnatter, and specifically the personal experiences and reputation he currently has with very prominent African Americans and other people of color, completely validates and corroborates the separate finding that Mr. Schnatter had no prejudicial intent or racial animus when he made the public comments at issue. The assessment focuses first on statements Mr. Schnatter made in recent years that were widely reported in the press, and whether such statements were fairly reported in the contexts in which they were made. FGIS reviewed the complete recordings and/or transcripts of two instances in which Mr. Schnatter made comments that were later used by some to characterize Mr. Schnatter as having intended to express racially biased and prejudicial sentiments. However, based on a fair and balanced review of those materials, it is our opinion that the statements were mischaracterized 1 This report was completed on July 1, 2020 but is dated based on the client’s release date. P a g e | 2 Attorney Client Privilege Attorney Work Product Privileged and Confidential as “racially prejudiced” in the mainstream and social media. More importantly, co-workers, associates, and all of the prominent African Americans interviewed by FGIS stated without reservation that the public comments by Mr. Schnatter were not in their view intended to express any racial animus or bias, but had been wildly taken out of context by some media and others. These interviewees further stated their strong belief that Mr. Schnatter never intended to express any racial prejudice in these statements was completely confirmed by their own personal experiences in dealing with Mr. Schnatter over many years, and in a variety of different relationships. They unanimously stated that Mr. Schnatter had never demonstrated to them any racist or discriminatory attitudes. In fact, there was a strong consensus that John Schnatter in his personal and professional life had demonstrated fairness and respect in his relationships regardless of an individual’s race or ethnicity. In addition to the interviewees’ own personal dealings with Mr. Schnatter, these African American interviewees all related that in the communities where they interacted with Mr. Schnatter, he always had a very good reputation as a generous man, who never in conduct or speech exhibited any racial bias, prejudice, or animosity, but rather was and is known to them as always being respectful for African Americans and people of color. The exact wording of the two statements is set forth below with a description of the context in which Mr. Schnatter spoke. FGIS consistently found that in all the negative media reporting of these statements, the reader was not provided any context or a fair description of the actual circumstances surrounding the statements. This failure served to sensationalize what were inaccurately depicted as racially offensive attitudes by Mr. Schnatter, while at the same time denying the reader knowledge with which to judge the comments in a fair perspective. Specifically, we reviewed: 1) Transcript from Papa John’s Earnings Call on Q3 2017 Results of November 1, 2017. 2) Transcript of a phone conference between Laundry Service and Mr. Schnatter. 3) Articles and social media in response to the above two statements. Comments on the NFL On November 1, 2017, Mr. Schnatter made comments related to the NFL during a Papa John’s third quarter 2017 earnings call. He specifically stated: “Now to the NFL, the NFL is hurting, and more importantly by not resolving the current debacle to the player and owner’s satisfaction, NFL leadership has hurt Papa John’s shareholders. Let me explain. The NFL has been a long and valued partner over the years, but we P a g e | 3 Attorney Client Privilege Attorney Work Product Privileged and Confidential are certainly disappointed that the NFL leadership did not resolve the ongoing situation to the satisfaction of all parties long ago. This should have been nipped in the bud a year and a half ago. Like many sponsors, we are in contact with NFL, and once the issue’s resolved between the players and the owners, we are optimistic that the NFL’s best years are ahead. For good or bad, leadership starts at the top, and this is an example of poor leadership.”2 Later in the call, an analyst with Stifel asked the following question: “Steve, last year NFL viewership was down quite a bit, but Papa John’s comps were up 4% to 5%. So, I’m trying to understand why a decline in viewership this year is a much bigger issue.” After Steve Ritchie, Papa John’s President and Chief Operating Officer at the time, stated that a new product launch may have masked some of the adverse impact of a decline in NFL viewership, Mr. Schnatter added to Mr. Ritchie’s initial response with the following: “Chris, this is John. You need to look exactly how the ratings are going backwards. Last year, the ratings for the NFL went backwards because of the elections. This year, the ratings have gone backwards because of the controversy. And so, the controversy is polarizing the customer, polarizing the country, and that’s the big difference here.”3 Some media reported Mr. Schnatter’s statements as specific criticism of the NFL players’ decision to continue “kneeling during the national anthem” even though his comments never even mentioned, much less passed judgment on, the players’ protest. Mr. Schnatter’s comments were falsely construed as criticism of the players’ “protests” both in print and social media.4 In one instance, Mr. Schnatter was wrongly accused of taking a stand against the players’ decision to kneel in protest, with the article going so far as to falsely state that Mr. Schnatter was against the players’ protest of police brutality.5 This repeated mischaracterization by some media continued to define the public reaction, as Mr. Schnatter’s comments were distorted as criticizing the NFL’s “failure to curtail players kneeling during the national anthem to protest police brutality against people of color.”6 In addition, the public reaction was that Mr. Schnatter was blaming sluggish pizza sales on 2 Transcript from Papa John’s International’s Earnings Call on Q3 2017 Results of November 5, 2017. 3 Transcript from Papa John’s International’s Earnings Call on Q3 2017 Results of November 5, 2017. 4 The Associated Press, Papa John’s apologizes for criticizing NFL anthem protests, November 15, 2017. 5 UPI, Papa John’s chairman resigns for using racial slur in conference call, Ray Downs, July 12, 2018. 6 CNBC, Let the finger pointing begin: Papa John’s shares plunge as pizza sales fall, current and former CEOs pass the blame, Sarah Whitten, August 7, 2018. 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